On May 6, the $150 million mortgage backing the Decoration & Design Building at 979 Third Avenue matured. Charles Cohen did not pay. Green Loan Services, an affiliate of SL Green, was appointed special servicer. The loan is now in default.
Cohen acquired the lease for the 18-story, 588,000-square-foot property in 1996 for $70 million. For nearly three decades, the D&D; Building was a crown jewel in his portfolio. That jewel has lost its luster.
Occupancy stood at 63 percent at year-end 2025, per Morningstar Credit. That is down from 83 percent at the end of 2020 and 95 percent in 2015. Annual revenue slipped to $36.7 million from $48.4 million over the same decade—a 24 percent decline.
The loan was originated by Citigroup in 2015 at $165 million and securitized in two CMBS trusts. Fitch Ratings downgraded the bonds last year. Despite the downgrade, the loan was current as of last month, according to servicer commentary. The maturity date changed everything.
Cohen does not own the land beneath the building. The Rice Foundation holds the ground lease. In 2024, the foundation granted Cohen an extension. Annual payments began at $5.8 million but escalate to $10.5 million by year 12. That is a structural cost increase baked into the capital stack.
Cohen Brothers general counsel David López called the default “business as usual” and said the firm is “actively working with the lender” to refinance. The landlord is in the market for new debt. Whether any lender will provide it at a spread that makes sense is an open question.
Distress at 979 Third Avenue is not an isolated event. In March, U.S. Bank filed to foreclose on 222 East 59th Street after Cohen defaulted in September and failed to pay. López blamed high ground rent. That property is technically separate but considered part of the D&D; Building complex.
Earlier this year, Cohen lost the firm’s headquarters at 750 Lexington Avenue in a foreclosure auction. The tower went back to the lender. Cohen is also fighting Fortress Credit, which secured a $187 million personal judgment against him last year. The two sides extended a deadline for a sale expected to satisfy the remainder of the debt to May 20.
The pattern is clear: a developer who built an empire on leverage and showroom prestige is now being picked apart asset by asset. The D&D; Building default is the latest, but it will not be the last.
What does this tell us about the broader market? The CMBS conduit market is no longer a refinancing backstop for stressed office assets. Special servicers are not extending; they are enforcing. Green Loan Services, as an affiliate of a major landlord, understands the asset class but also understands the math.
Ground lease structures amplify distress. When revenue declines and ground rent escalates, the equity tranche evaporates. Lenders become the de facto owners. Cohen’s case is a textbook example of how leasehold positions in office assets become untenable during a demand shock.
The Fortress judgment adds a personal liability layer that complicates any restructuring. A $187 million personal judgment means Cohen’s personal balance sheet is impaired. That limits his ability to inject equity or guarantee new debt.
For institutional investors, the lesson is forensic. The D&D; Building’s decline from 95% occupancy to 63% did not happen overnight. It took a decade. The loan was current until maturity. The bonds were downgraded. The special servicer was appointed. Each step was visible in CMBS data. The market chose to look away.
Cohen’s empire is not collapsing in a single event. It is being dismantled in a series of foreclosures, judgments, and defaults. The D&D; Building is the latest domino. The question is how many more fall before the music stops.